ividend payout by 33 percent and authorized an aggressive ramp-up of its share buyback program Tuesday. "Of course, no one is satisfied with where our stock is today," Chairman and CEO Samuel J. Palmisano said in a speech to about 150 people at IBM's annual shareholder meeting.
"We need to get our stock price up," he added later in response to a shareholder question.
"That is quite honestly what we all want to do."
But Palmisano expressed confidence in the technology company's global strategy, its potential in new software and microchip markets, its acquisitions and its overall "reshaping" since divesting its personal-computer business nearly two years ago.
"As we stand poised before a profoundly new era of technology, business and society, I strongly believe that there is no other company that is as well positioned for leadership in all the ways that a business can lead," he said.
It had been exactly one year since IBM's last dividend increase, when the quarterly payout jumped 50 percent -- to 30 cents per share from 20. The new quarterly dividend will be 40 cents per share.
IBM's shares gained US$4.27, or 4.5 percent, to US$99.48 in Tuesday afternoon trading on the New York Stock Exchange, which means the new dividend would produce an annual yield of 1.6 percent. Depending on the company's share count, the dividend payout could cost IBM more than US$2 billion (euro1.47 billion).
IBM's board also authorized the company to spend an additional US$15 billion (euro11.04 billion) purchasing its own stock. With money left over from a previous authorization, the company now has US$16.4 billion (euro12.07 billion) to spend on that purpose.
The plan continues a long-running effort at Armonk, New York-based IBM, which spent US$8 billion (euro5.89 billion) buying its stock last year and US$3.5 billion (euro2.58 billion) on that during the first quarter of this year. By reducing the number of shares on the open market, the strategy has helped IBM meet one of its key financial goals: to increase earnings per share by at least 10 percent a year, even as revenue chugs along with mid-single digit growth rates.
In fact, because of the new buyback plan, which is expected to be carried out over the next few months, IBM now says it expects earnings per share to rise 12 to 14 percent in 2007, a few points above previous guidance.
This strategy appeared to work last year, as the shares rode a second-half kick to an 18 percent gain for 2006. This year, the stock has returned to treading water.
IBM's treasurer, Jesse J. Greene Jr., said the high buyback rate would still leave the company with plenty of flexibility to invest in the business and make acquisitions -- which have been a key contributor to IBM's growth, especially in the highly profitable software unit.
IBM's operations generated US$15.3 billion (euro11.26 billion) in cash last year, and Greene said the company is "under-leveraged" -- meaning it would be willing to take on more debt if necessary.
